Attack would have been the best defence for Smith & Nephew

Let's be clear, Smith & Nephew has not breached any rule in declining to tell its shareholders about the £7bn takeover approach from Johnson & Johnson, its larger healthcare rival. News of the approach emerged weeks after the proposal was made and rejected. In those circumstances, the Takeover Panel's guidelines do not require a public statement, even after today's 9.5% rise in the share price, because there are no talks taking place now and no offer on the table.

The question instead is whether it is sensible for S&N to remain silent since the Panel's rules, while not requiring a statement, certainly do not forbid one. In other words, what's the company's problem in admitting that a credible would-be bidder made an approach at a price the directors deemed unacceptable?

Silence reigns but we can guess that S&N's directors share the usual boardroom fears. They may feel that airing their reasons for rejection would put the company "in play" and provoke a debate about the right price for a takeover. They may even have visions of the shareholder register being invaded by hedge funds who then try to whip up a campaign to get the company sold.

These would be legitimate worries but it is not clear that staying schtum addresses them. It is probably true that most long-term shareholders in S&N would (and should) regard 750p-800p as a joke. Deutsche Bank's analyst, for example, said £10 would be nearer the mark for a takeover. The point is that, speculation about J&J's intentions will not vanish, however much S&N may wish it.

A useful rule of thumb in these situations is: get your retaliation in first. A confident statement from S&N's respected chairman John Buchanan, laced with lofty contempt for the would-be bidder's notion of fair value, was what was needed . Silence looked odd, evasive even.